BETTER DEMAND FOR WOOL

Hawke's Bay Herald-Tribune, Issue 187, 25 August 1937, Page 13

BETTER DEMAND FOR WOOL

Danger of Much Higher Prices EFFECT OF CHSNESE WAR The Intelligence Branch of the Imperial Economic Committee summarizes the chief faetors which have contributed to the improved demand for wool as follows: — 1. A general improvemot in purchasing power and industxial conditions in some of the more important consuming countries. 2. The increased demand for wool in the United Kingdom and in the United States. 3. The confidence engendered by the sound statistical position of wool in the chief producing countries. 4. The improvement — to a limited extent — of international trade in wool products. 5. The general psychologieal effect of the increasing realization of the progress of rearmament in some countries and its probability in others. 6. The hope of some relaxation of trade barriers following the currency adjustment arrangements of the gold bloc countries. The conclusions which can be diawn from this summary, applyiug as it does to the price improvement during 193536, were ataply borue out during the past season and, if anything, the faetors thomselves apply even moro strongly to-day (says tho Annual Review issued by Pyne, Gould, Guinncss, Ltd.). Statistically the position is exceptionally sound; rearmament programmes have created not only a diroct demand but also an indirect one through the increased purchasing powor of workers in that industry; the United States has again become one of the more important consumers; and the recent abandonment by Prance of her expensive golden franc must give her an inorcased cxport trade and a consequently increased demand for tho raw staple. Pinally, our most important consumer last year — Japan — has embarked ou hostilities in North. China, and this will undoubtcdly lead to an increased hunger for wool which, although she will buy more heavily in tho Conunonwealth next season, must have an important effect on her pur- • chases in New Zoaland. The dark and uncertain international outlook is, of eourse, pxercising a steadying tendency on undue optimism, and manufacturers, who have been caughfc bcfore, are nervous as to what tho position will be when armament programmes have been completed. Av'ool, however, is not dear in terms of gold, standing in depreeiated sterling at approximately £17 a bale, and there seems no rcason why our preseut satisfactory basis of values should not be at least maintained. Much higher prices would be dangerous, lcadiug imtnediately to substitution, and it would be greatly to the disadvantage of producers if values skyrocketed to 1924-25 absurdities. "VVe hope, therefore, to look forward to a season in which we shall receive fully as much for our wool as we did in 1936-37, and not to one in which a mad scramble will produce prices most acceptable at the moment but most unsettliDg for the future.